The Swiss financial centre is one of the most competitive in the world and the global leader in the cross-border wealth management business. It also offers a first-class environment for digital innovation, while its regulatory system is recognised internationally as exemplary.
In 2019 the banks posted a solid performance in a challenging environment.
At the end of 2019, there were 246 banks operating in Switzerland, two fewer than at the end of 2018. Banks in Switzerland are classified into eight categories.
The economic environment in which banks in Switzerland operate continues to present substantial challenges: persistently negative interest rates, restrictions on market access and the economic downturn triggered by the COVID-19 pandemic.
Swiss banks have significantly increased their capital and liquidity buffers over recent years, and they are well equipped to handle the current uncertainty.
In 2019, 216 of the 246 banks in Switzerland made a profit. The aggregate net income of the banks in Switzerland rose by 1.1% year-on-year to CHF 66.1 bn in 2019.
The result from interest operations (up 1.0% at CHF 23.8 bn) was the largest contributor to total net income in CHF terms despite the low interest rate environment. The result from commission business and services rose by CHF 0.4 bn or 1.7%, the other result from ordinary activities by CHF 0.9 bn or 7.8%. The result from trading activities was down CHF 0.8 bn or 9.4%.
Note: The big banks contribute a much larger share of net income than the other categories – it has fluctuated between 46% and 51% since 2010. They have thus been omitted from the chart in order to provide a clearer picture of the trends among the other categories.
The aggregate balance sheet total of all banks in Switzerland grew by 2.9% from CHF 3,225.0 bn to CHF 3,317.6 bn in 2019. The cantonal banks posted the largest year-on-year increase (+CHF 26.4 bn), followed by the Raiffeisen banks (+CHF 23.0 bn), the big banks (+CHF 19.9 bn), the “other banking institutions” category (+CHF 14.0 bn), the foreign banks (+CHF 8.8 bn) and the regional and savings banks (+CHF 6.0 bn). The categories posting a decline in their balance sheet totals were stock exchange banks (-CHF 5.0 bn) and private bankers (-CHF 0.5 bn).
Banks’ lending business is a key pillar of Switzerland’s economic performance. Unlike other countries, Switzerland was not confronted with a credit crunch, either in the midst of the financial crisis or in the current COVID-19 pandemic. The COVID-19 loan programme has provided a clear illustration of the contribution banks make to Switzerland’s prosperity. Together with the federal government and the authorities, they put together a programme to grant loans backed by joint and several guarantees with a total volume of CHF 40 bn. At the end of the application period by end of July 2020, more than 136,000 COVID-19 bridging loans amounting to some CHF 16.8 bn had been granted. According to information provided by SECO, 123 banks participated in the SME loan programme.
The total volume of outstanding domestic loans came to CHF 1,213.8 bn in 2019. Overall domestic lending was up 3.3% relative to 2018. Growth in domestic mortgage loans was thus slightly weaker than in the previous year, when it had been 3.9%. Mortgage loans remain the most important form of domestic lending by far.
The banks in Switzerland had assets under management totalling CHF 7,893.4 bn at the end of 2019. This represents an increase of CHF 959.8 bn or 13.8% year-on-year. The share of non-resident customer assets remained virtually unchanged at 47.6%. Switzerland is the global market leader in cross-border wealth management, accounting for about a quarter of global assets managed cross-boarder.
The banks in Switzerland had assets under management totalling CHF 7,893.4 bn at the end of 2019. This represents an increase of CHF 959.8 bn or 13.8% year-on-year. The share of non-resident customer assets remained virtually unchanged at 47.6%. Switzerland is the global market leader in cross-border wealth management, accounting for almost a quarter of all cross-border assets under management worldwide.
Some of the assets booked in Switzerland are managed via investment solutions (e.g. collective investment vehicles and mandates) with Switzerland as their production location. The broadly defined investment management industry in Switzerland is responsible for managing a total of CHF 3.9 tn. Asset management, including collective investments and discretionary mandates for institutional customers, accounts for CHF 2.5 tn of this. The remaining CHF 1.4 tn is attributable to discretionary and advisory mandates for non-institutional customers – mainly private customers – and advisory mandates for institutional customers.
Note: relative sizes are indicative.
Sources: SNB, BCG, IFZ/Asset Management Association Switzerland. SBA
The banks employed 89,531 full-time equivalents in Switzerland in 2019, down 1,130 or 1.2% year-on-year. As in prior years, some of this decrease was due to jobs being transferred to group entities not covered by the banking statistics.
The SECO puts the Swiss banking sector’s average unemployment rate in December 2019 at 2.5%. This is identical to the figure for the overall economy. Averaged over 2019 as a whole, the banking sector had 3,115 registered unemployed, representing a fall of 303 year-on-year. The job market remained extremely robust, given the major challenges faced by the banks.
The SBA’s annual survey of employment trends in the banking sector shows a small increase in the banks’ domestic headcount from 87,122 at the end of 2019 to 87,269 in June 2020 – a rise of 147 full-time equivalents or 0.2%.
Around three quarters of the banks that responded expect employment to remain stable in the second half of 2020. This represents a significant increase of some 15 percentage points compared with last year’s survey. However, expectations of rising employment are much lower than a year ago: only 12.7% (down from 25.7%) of respondents expect an increase in headcount.
According to the monthly SECO statistics, the unemployment rate in the banking sector increased significantly in the first half of the year, rising from 2.5% at the end of December 2019 to 3.2% at the end of June 2020. This is equal to the overall Swiss unemployment rate.
Swiss banking comprises several areas of business that follow their own individual development path: retail banking, corporate banking, investment management and wealth management. > Read more